Trading Places

Is trade an unvarnished good?

Before the financial crisis, we were frequently offered humorous pictures of anti-trade militants protesting a World Trade Organization meeting. They were reportedly concerned that global trade would wreak havoc with indigenous cultures and exploit vulnerable populations.

While some could see their point, it was usually undercut by the simple fact that none of these activists were looking to move in with the indigenous peoples they were so enamored of or avail themselves of indigenous health care.

The logic of trade seems simple: when everyone does what he or she does best, and we trade our goods and services to get what we need, we’re all better off. This is as true for countries as it is for individuals.

So when global trade began to contract in early 2008, that was troubling. When it fell off a cliff last fall, its decline was consistent with the rest of the economy. But now it’s stabilized—at about the same level it was in mid-2006. That’s not a great leap backwards; that’s a minor hiccup on the road to greater prosperity.

Some think we’re headed for a world of de-globalization where Luddite loonies call the policy shots and the benefits of trade are lost. But the data seem to show that global trade is coming back. One of the striking things about this recession has been the lack of any significant protectionism. The revival of trade growth is just one more sign that the global recession is over.

Douglas R. Tengdin, CFA Chief Investment OfficerHit reply if you have any questions—I read them all!

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Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. -
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